2017: Trump's Troubled Year In Trade Policy

Phil Levy
, ContributorI write about international economic policy, with a focus on tradeOpinions expressed by Forbes Contributors are their own.

The past year has been a momentous one in international trade policy, and not in a good way. The Trump administration has deviated significantly from what had been a fairly bipartisan U.S. approach to trade policy. It was not a good year. Those looking to proclaim that the Trump administration is doing well on the economic front need to avert their gaze from the world of trade.

US President Donald Trump oversaw a year of dramatic change in U.S. trade policy. NICHOLAS KAMM/AFP/Getty Images.

In the spirit of reviewing the expiring year, here are four top trade stories from 2017:

January – Withdrawal from the Trans-Pacific Partnership (TPP). Within days of taking office, President Donald Trump turned the TPP-12 into the TPP-11. Negotiations that had begun under President George W. Bush and that offered the United States a way to shape global trading rules in favor of its consumers and exporters would now proceed without the United States, if at all.

Because the United States Congress had never adopted the agreement, the withdrawal was immediate, but the effects were felt throughout the year. The two most salient effects were first that President Trump had little to offer when he visited Asia in the fall; and second that the rest of the world was left wondering just what the Trump administration did want in trade, if it opposed an agreement so tilted in its favor.

April – Near-withdrawal from the North American Free Trade Agreement (NAFTA). One of the hallmarks of the Trump administration’s first year in trade was a cacophony of conflicting voices. This issue came to the fore in late April when a trade-skeptical set of advisers drew up an executive order to withdraw the United States from NAFTA, only to have other advisers plead for a stay of execution, which was ultimately granted. The near-miss served as a wake-up call for the business and agricultural communities, who may not have taken the president sufficiently seriously (or literally). The episode ultimately led to ongoing and difficult new talks to renegotiate NAFTA. Given other countries’ reluctance to engage with the Trump administration on trade, these talks were the only serious negotiations throughout the year, despite the administration’s promise to rework the range of U.S. deals.

June – National Security Steel Investigation (Section 232). President Trump was determined to do something to help the steel sector, a traditional bastion of protectionism from which many of his advisors came. As the steel industry was already making ample use of anti-dumping and countervailing duty laws, the challenge was to do something both new and permitted under global trade rules. In mid-April, shortly before the NAFTA episode, President Trump launched a new investigation into whether steel imports harmed U.S. national security. Findings from the investigation were publicly promised for June 30.

The midpoint of the year was significant because the report failed to come out, and still hasn’t. There were a number of reasons why the Section 232 approach was ill-advised, but they were all apparent in advance; the provision had generally lain dormant pre-Trump for that reason. It is relatively rare in U.S. trade policy for such public deadlines to be missed and for such promises to go unfulfilled. It further suggests disorganization and discord in the creation of Trump trade policy.

December – World Trade Organization (WTO) Ministerial Meeting. Since the Second World War, the United States has played a leading role in crafting a system of global trade rules – one that has benefited the country enormously. The culmination of these efforts has been the WTO. While President Obama was unusually neglectful of the WTO, his administration at least went through the motions of supporting the institution. President Trump’s team has not even done that. The principal policy contribution has been a dangerous move to block the appointment of key dispute settlement body members.

These developments drew little attention, except among trade aficionados, but in December the WTO had its biennial ministerial meeting in Argentina. The policy impetus of the United States always plays a central role in such talks. The President’s point person on trade offered a multi-pronged critique of the failings of the WTO and… nothing. There was no plan for how to remedy these failings. The United States had abandoned its leadership role.

Each of these actions set in motion a train of events that will continue into the new year. The TPP countries – minus the United States – are still talking about concluding a deal; and the United States faces ongoing challenges in Asia. The NAFTA renegotiations are meant to conclude no later than March, though it seems unlikely that deadline will be met. There is a looming statutory deadline for the Section 232 steel investigation. And the WTO is still grappling with how to negotiate new rules and how to deliver on old ones, with important conflicts looming.

As 2017 started, observers wondered whether President Trump really meant his harsh criticisms of global trade deals, or whether he was just playing to the crowds as his predecessor had done. It turns out President Trump meant them. To date, his administration has been ineffective in putting forward a viable new vision for trade, but it has managed to shake the old order.